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Employers that employ 20 or more people are required to comply COBRA. What that means is these employers have to allow departing employees the option to continue their health insurance by paying the premium, as well as, a 2 % administrative fee. Most employees, unless they have a serious health condition, do not elect to have COBRA coverage. They make this decision for a variety of reasons. Typically, they can find similar insurance for less or they conclude the benefit is cost prohibitive.

Enter the stimulus package. Under the stimulus package signed by President Obama today, the government is going to subsidize 65% of an employee's COBRA premium provided the employee became involuntarily unemployed (that's a nice way of saying someone done stole your cookies) between September 1, 2008 and December 31, 2009.

My first thought was, "How does this all work?" The answer appears to be that when an employee elects to receive COBRA benefits, after becoming "involuntarily unemployed" the employer pays 65% of their COBRA benefit. Then the employer will be able to offset that premium payment against their payroll taxes. (More business for my CPA buddies.) In addition, employers must contact their employees who elected to receive COBRA on or after September 1, 2008 and notify them that they are entitled to have their former employer reimburse them the 65% of the premiums paid to date. Let me see if I can anticipate the next question. What if you did not elect to receive COBRA because of the cost and the election period has expired? Well, all is not lost. Apparently, you will get a new election period. That means that employers will have notify employees let go between September 1, 2008 and February 16, 2009 to allow them a second opportunity to elect receipt of COBRA benefits, this time under the terms of the stimulus plan. Once notified, employees will have 60 days to make that election.

The bad thing about legal training is that your brain gets to a stage where it never stops churning. So I don't know whether employees who were terminated before September 1, 2008 but whose COBRA election period expired on or after September 1, 2008 will be entitled to receive a second chance at the new and improved stimulus COBRA. My suspicion is they won't. I'll let you know what I find out.

For those of you, like me, that can brag that tax was their worst class in law school and believe that Calculus was conceived to flummox us average folk, here is a video to explain the economic stimulus package.

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